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| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Channels of risk sharing in the eurozone: what can banking and capital market union achieve? |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | IMF Economic Review |
| Publisher | Palgrave Macmillan |
| Geographical Reach | international |
| ISSN | 2041-4161 |
| Volume | 67 |
| Number | 3 |
| Page Range | 443 - 495 |
| Date | 2019 |
| Abstract Text | We study channels of risk sharing in the EMU before and after 2008, when the Great Recession started. Empirically, higher cross-border equity holdings and more direct bank-to-nonbank lending are associated with more risk sharing while interbank integration is not. Equity market integration in the EMU remains limited while banking integration is dominated by interbank integration. Further, interbank integration proved to be highly procyclical, which contributed to a freeze in risk sharing after 2008. Based on this evidence, and results from simulations of a stylized DSGE model, we discuss implications for banking union. Our results show that direct banking integration and capital market integration are complements and that robust risk sharing in the EMU requires integration on both fronts. |
| Related URLs | |
| Digital Object Identifier | 10.1057/s41308-019-00083-3 |
| Other Identification Number | merlin-id:18334 |
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| Keywords | General business, management and accounting, general economics, econometrics and finance |
| Additional Information | This accepted manuscript is a post-peer-review, pre-copyedit version of an article published in IMF Economic Review. The definitive publisher-authenticated version "Hoffmann, Mathias; Maslov, Egor; Sørensen, Bent E; Stewen, Iryna (2019). Channels of risk sharing in the eurozone: what can banking and capital market union achieve? IMF Economic Review" is available online at: https://doi.org/10.1057/s41308-019-00083-3 |